TMI Blog2021 (9) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee earned exempt income and by applying the decision of Hon'ble High Court of Bombay we restrict the disallowance to the extent exempt income earned. Accordingly, the order of CIT(A) is set aside and the grounds raised by the assessee in this regard are allowed. Seeking deduction paid towards Education Cess under Finance Act while computing the taxable income - HELD THAT:- We note that the assessee paid Education Cess while computing the taxable income under normal provision of the I.T. Act. The Hon'ble High Court of Bombay in the case of Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] was pleased to hold that the Education Cess is an allowable expenditure as per the provision of the I.T. Act.. Therefore, in view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that the assessee made investment in IDFC Mutual Fund to an extent of ₹ 20 crores which yielded tax free dividend of ₹ 13,022/-. Since, no disallowance of expenditure made by the assessee, the AO show caused the assessee why expenditure incurred for earning such exempt income should not be disallowed as per the provisions of section 14A r.w. Rule 8D. It was explained that no direct expenditure was incurred by the assessee to earn such tax free dividend and contended the provisions of section 14A are not applicable. The AO did not accept the submissions of assessee and disallowed expenses of ₹ 62,26,625/- under Rule 8D(2)(iii) being 0.5% of the average value of investments treating the same the expenses attributable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsed the decision of Tribunal to the extent of limiting the disallowance to the exempt income earned therein. In the present case as discussed above, there is no dispute that the assessee earned exempt income of ₹ 13,022/- and by applying the decision of Hon'ble High Court of Bombay we restrict the disallowance to the extent exempt income earned. Accordingly, the order of CIT(A) is set aside and the grounds raised by the assessee in this regard are allowed. 6. The assessee also raised additional grounds of appeal seeking deduction paid towards Education Cess under Finance Act while computing the taxable income. The ld. AR submits that the above ground raised by the assessee is purely legal ground and raised for the first time b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y High Court as follows: 22. Applying to the aforesaid principles, we find that the legislature, in Section 40(a)(ii) has provided that any rate or tax levied on profits and gains of business or profession shall not be deducted in computing the income chargeable under the head profits and gains of business or profession . There is no reference to any cess . Obviously therefore, there is no scope to accept Ms. Linhares's contention that cess being in the nature of a Tax is equally not deductable in computing the income chargeable under the head profits and gains of business or profession . Acceptance of such a contention will amount to reading something in the text of the provision which is not to be found in the text of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UN/2017 for the assessment years 2013-14 2014-15 dated 25.07.2019 on the issue has held and observed as follows: 13. On hearing both the parties on this issue, we find that this issue is covered one by the decision of the Hon'ble High Court of Judicature for Rajasthan Bench at Jaipur in the case of Chambal Fertilisers and Chemicals Ltd. Vs. JCIT, Range -2, Kota wherein substantial question of law No. 3 is relevant in this regard (Para 3) and the same was adjudicated by the Hon'ble High Court at Para 12 of the judgment. The Hon'ble High Court on this issue held the said question No. 3 is answered in favour of the assessee. For the sake of completeness, the said Paragraph is extracted as under: 12. We have heard coun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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